January 16th, 2008
SAP - Business Objects acquisition: Linking value proposition to action
SAP announced yesterday that it has successfully completed the share purchase requirements needed to acquire Business Objects. Coming on the heels of that announcement, SAP held a special briefing for bloggers with Henning Kagermann, CEO of SAP, and John Schwarz, CEO of Business Objects.
Discussing the value proposition of the acquisition, SAP said its goal is connecting the business strategy of its customers to execution. In response to my question asking to clarify this high-level statement, the executives said the value proposition is implemented by helping their customers:
- Define their business strategy
- Break it down into key performance indicators (KPIs)
- Link the KPIs to operational data
- Monitor how their business is doing with respect to those KPIs
- Use the results of the monitoring to trigger decisions in response to events (inside the business or external to it) that affect the business. In particular, integration between SAP and Business Object means these trigger events can be based on what happens inside the SAP system.
As an example, they described an implementation at Paris Disneyland. The theme park faced a situation where they had a large volume of traffic, yet profits were unexpectedly low. To analyze why, the park instrumented every cash register on their property, linking the registers to a central park operations center. The data from this instrumentation allowed the park to create a performance model, which eventually concluded that profits are linked to weather and its effect on the flow of people through the park.
Based on these results, the park implemented a system in which the operations manager responds to weather events by sending mobile phone text messages to employees located throughout the park. The employees guide visitors into indoor areas, which presumably encourages them to remain in the park despite bad weather. These steps have dramatically increased profits.
This scenario provides an interesting glimpse into the mechanism by which a high-level value proposition is translated into actionable steps in an IT environment.
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures. Click here to discuss this post with him on Twitter. See his full profile and disclosure of his industry affiliations.
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